In the context of abundant capital, decreasing deposit and lending interest rates, businesses still find it difficult to access bank capital, leading to negative credit growth. This issue is receiving attention from the public.
Only good businesses get “cheap” loans
According to the State Bank of Vietnam, credit outstanding in the entire system as of the end of February 2024 decreased by 0.72%. The main reason is that the output of many businesses narrowed, people reduced borrowing and spending… even though the average lending interest rate has now revolved around 6.4% per year, a decrease of 0.7 percentage points compared to the end of 2023.
Surveying at some commercial banks in Ho Chi Minh City, reporters of Nguoi Lao Dong newspaper noted that the short-term lending interest rates (from 3 to 6 months) ranged from 4.3% – 7% per year; for medium and long-term loans (from 12 months and above), interest rates were around 6.8% – 10% per year.
Banks have excess money, businesses lack capital but find it difficult to access loans. Photo: TAN THANH |
For example, Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) has just announced a package of VND 300,000 trillion loans, with the lowest interest rate of 5% per year for short-term loans. Accordingly, this special competitive interest rate is prioritized for enterprises engaged in imports and exports using a variety of products and services at VietinBank, transferring export revenues to transactions at this bank, customers operating in priority sectors…
Vietnam Maritime Commercial Joint Stock Bank (MSB) also implemented a VND 3,000 trillion green credit package, with interest rates starting from 4.3% per year for short-term loans and from 6.8% per year for medium and long-term loans. The borrowers are enterprises with investment projects in the energy, water resources, waste, construction, processing and manufacturing industries, green conversion projects meeting green project criteria… Enterprises with projects or production and business plans in sectors granted green certificates, sustainable development certificates by textile, seafood and agriculture sectors will also be prioritized for credit support by MSB.
Meanwhile, at Nam A Commercial Joint Stock Bank (Nam A Bank), the lowest lending interest rate is 6% per year for good businesses and businesses in priority sectors. “In the current context, loans for consumer purposes or high-risk loans will be given competitive interest rates compared to other banks. Specifically for loans in priority sectors, the bank will continue to reduce interest rates in the coming time,” said a deputy general director of Nam A Bank.
However, in reality, customers can only enjoy the lowest interest rates when borrowing large amounts, participating in many financial services that generate profits… At the same time, borrowers must have feasible production and business plans, ensure income sources to repay debts, and have sufficient collateral assets without bad debts…
Conversely, banks will offer the highest interest rates when customers only meet the conditions of having enough income and collateral assets. On the other hand, companies without collateral assets almost cannot access credit.
Collateral barriers
At a conference to deploy tasks of monetary policy management in 2024, focusing on removing difficulties for production and business, promoting growth and macroeconomic stability chaired by Prime Minister Pham Minh Chinh on March 14, many businesses reflected that lending interest rates are still high, especially existing loans which are associated with existing debts.
Many operating efficient businesses, especially small ones, reported that they could not borrow money due to collateral barriers. This is a factor that businesses need support in accessing bank capital.
A top leader of Vietnam Export Import Commercial Joint Stock Bank (Eximbank) admitted that many companies have good revenues, stable cash flows. However, these companies still cannot borrow from banks because they do not have collateral assets or the value of assets is not enough to secure the loans. “To address these 2 bottlenecks, Eximbank and many other banks have considered supporting businesses based on cash flows as a basis for unsecured lending,” said a leader of Eximbank.
Nguyen Van Than, Chairman of the Association of Small and Medium Enterprises, said that nearly 1 million small and medium-sized enterprises are currently facing a shortage of capital while banks have excess money – an ongoing contradiction without a solution.
Believing that reducing lending standards is impossible because it does not ensure capital safety, Than said that the government needs to find other directions to support businesses. “For example, the fiscal policy currently has packages of loans with an interest rate of 1% per year. The government can study how to effectively implement these loan packages. From there, businesses will have additional sources of capital to access”, said Than.
However, financial expert, bank – Dr. Nguyen Tri Hieu, said that the core of supporting businesses is banks further reducing lending interest rates, and the state stepping in to guarantee loans for businesses. Only then will banks feel comfortable in lending.
According to Hieu, commercial banks should abolish paying high salaries to board members hundreds of millions of dong per month. This action will reduce additional operating costs for banks to further reduce interest rates. Instead, banks should only pay modest compensation to these individuals at each meeting. The reason is that board members are special tasks that only help banks in business orientation.
Regarding guaranteeing loans for businesses, the government needs to modify legal regulations on the operations of credit guarantee funds to be in line with reality. Currently, the law stipulates that the operation of Credit Guarantee Funds in provinces and cities must not have a capital deficit. This has made the leaders of these funds afraid of liability, leading to ineffective operations. “On the other hand, the government can propose to the National Assembly to pass the establishment of a national credit guarantee fund, with a capital of tens of thousands of billion dong from the state budget and supplemented with annual capital. The national credit guarantee fund must operate as a professional financial organization to assess scale, capacity, production plans… to guarantee businesses borrowing from commercial banks. If for some reason businesses lose the ability to repay debts to banks, the national credit guarantee fund will use its capital to pay the commercial banks. Then, the fund will work with businesses to recover the capital”, proposed Hieu.
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Banks announce average lending interest rates Commercial banks must announce the average lending interest rates according to the State Bank’s plan before April 1st, also as a factor to create pressure to reduce lending interest rates in the future. Currently, some banks and financial companies have started announcing average lending interest rates. According to financial experts, when lending interest rates are publicly announced, there will be comparisons and monitoring from the market, customers… for banks to proactively reduce operating costs, thereby reducing interest rates. |
Thy Tho – Thai Phuong
